Missed arbitrage
On Boxing Day, when Centrebet had Labor paying $2.20 for a win, an opportunity for arbitrage existed. If (on that day) you had placed $456.79 on Labor at Centrebet paying $2.20; and you placed $543.21 on the Coalition at SportsBet paying $1.85; you would have won $1004.94 regardless of which party had won the 2007 Federal election.
For an outlay of $1000 you would have recovered a guaranteed $1004.94. Okay, it would have only been a 0.49 per cent return on investment and you would have to wait until late 2007 to collect. And, yes, you would have done better putting your money into a savings account.
Nonetheless, arbitrage suggests a market inefficiency, where at least one of the prices is out of whack. Again, I am intrigued by the irrational betting that has occurred on Centrebet over the past fortnight. Was it incompetent betting or a feeble attempt to manage the perceptions of those like me who watch the betting market?